Casinos brace for impact of Internet gambling

Lawrence Vaughan, chief operating officer of South Point Poker, one of the first Nevada online licensees, said legalizing Internet poker removes the stigma some people had associated with it.

“You had to move money in shady ways around the world to even play online,” he said. “Now it’s the sort of thing your mom could sign up for.”

Ultimate Gaming CEO Tobin Prior, whose firm started taking poker bets Tuesday in Nevada, added, “Players won’t have to worry if their money is safe. They are going to be able to play with people they can trust and know the highest regulatory standards have been applied.”

PokerStars, one of the parties charged in the 2011 crackdown that came to be known in the industry as “Black Friday,” later bought Full Tilt Poker, another defendant, and reached a settlement with the federal government, paying $547 million to the Justice Department and $184 million to poker players overseas to settle a case alleging money laundering, bank fraud and illegal gambling. It admitted no wrongdoing and says it is in good standing with governments around the world.

Its parent company, The Rational Group, based on the Isle of Man in the U.K., would not say whether it plans to try to buy another casino or partner with one to gain entry into the U.S. online gambling market.

Introducing new players to poker over the Internet makes it less scary and potentially more popular, said David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas.

“It was mostly old guys with cigars,” he said. “It was very intimidating to walk into a poker room and see a guy who’s a thousand years old, smoking 10 packs of cigarettes a day, giving you dirty looks because you’re taking the wrong card,” he said. “What online poker did was let people get familiar with the game, feel a little bit of confidence and then they said, ‘I want to go to Vegas and do the real thing.'”

Every week, it seems, a new study comes out touting the promise of Internet gambling for cash-strapped casinos and even more cash-strapped state governments.

Gambling Compliance, which tracks the online gambling industry, predicts Internet gambling in New Jersey will bring in nearly $262 million in its first year and nearly $463 million after four years. The group said that figure could go as high as $575 million after four years if online gambling takes off in New Jersey.

H2 Gambling Capital, a U.K. consultancy for the Internet gambling industry, predicts 17 states will have approved Internet gambling by 2017, led by New York, California, Florida, Illinois and New Jersey.

And Morgan Stanley predicts that by 2020, online gambling in the U.S. will produce the same amount of revenue as Las Vegas and Atlantic City markets combined bring in today: $9.3 billion.

Indian tribes are also moving to get into the online gold rush.

Two groups of tribes have already formed alliances to explore offering Internet gambling, and in April, the Cheyenne-Arapaho Tribe reached a deal with Oklahoma allowing the tribe to offer Internet gambling to customers outside the U.S. through its pokertribes.com web site. The Shoshone tribe in Nevada has a deal with an online company to offer similar Internet gambling to foreign customers in a venture that could go live in May.

States across the country are also turning to the Internet to boost sales of their lottery tickets. Twelve states have either approved or are considering selling lottery tickets online, and Georgia and Illinois are already doing it.

What types of games can be played for money online varies by state.

New Jersey will offer people within the state all the games patrons can play in physical casinos. Delaware will do the same, along with bingo. Nevada only offers poker. A proposed Internet betting law in Massachusetts would prohibit online slot machine games.

But in most cases, the games can be accessed through computers, portable tablet devices and smartphones — putting a casino or a card game within reach at 3 a.m. in the kitchen, in the middle of the day at the beach, or on a crowded commuter train.

With the Internet putting legal gambling directly into so many more hands, some are concerned about an increase in problem gambling, particularly when social media sites offer real-money gambling in the U.S., as some do already in other countries. Zynga, for instance, began taking real-money bets earlier this year in England, and its stock price jumped 15 percent in a day.

“Compulsive gambling is an impulse disease: you get an urge, you jump in your car and drive to Atlantic City or you call your bookie and then wait to see the result of the game you bet on,” said Arnie Wexler, the former chairman of New Jersey’s Council On Compulsive Gambling and himself a recovered problem gambler. “Now you have Internet gambling and you wake up in the middle of the night and in your birthday suit, you can blow a lot of money. I know one guy who lost $30,000 in one night of Internet gambling.”